Oil prices held steady on Thursday as investors weighed the potential impact of US president Donald Trump’s tariffs on global economic growth, while a weaker dollar and signs of robust US gasoline demand provided some support.
Brent crude (BZ=F) was trading at $70.21 a barrel, while West Texas Intermediate (CL=F) was changing hands at $68.31.
As policymakers continue to express concern over the inflationary impact of Trump’s tariffs, the minutes from the Federal Reserve’s 17-18 June meeting, released on Wednesday, showed that only “a couple” of officials felt that interest rates could be cut as soon as this month. Higher interest rates typically dampen demand for oil by making borrowing more expensive.
However, a weaker US dollar, which made oil cheaper for holders of other currencies, offered support to prices. Oanda senior analyst Kelvin Wong noted that the softer dollar in Asia trading was helping to prop up oil prices.
Read more: FTSE 100 LIVE: UK and German stock markets hit record highs as traders shrug off Trump's trade war
Further underpinning prices, US crude stocks saw a rise, while gasoline and distillate inventories fell, according to data from the Energy Information Administration (EIA) on Wednesday. Gasoline demand surged 6% to 9.2 million barrels per day last week, the EIA reported.
Global demand also showed signs of strength. JP Morgan noted that global daily flights averaged 107,600 during the first eight days of July, marking an all-time high. Flights in China had reached a five-month peak, while port and freight activities pointed to sustained trade expansion from last year.
In a client note, JP Morgan said: “Year to date, global oil demand growth is averaging 0.97 million barrels per day, in line with our forecast of 1 million barrels per day.”
Gold prices edged higher in early European trading on Thursday, buoyed by a slight retreat in the dollar, as investors closely monitored the escalating trade tensions following Trump’s expansion of his tariff war.
Gold (GC=F) futures were 0.2% higher at $3,328.70 an ounce, while spot gold gained 1% to $3.321.90 per ounce.
“Gold bounced off a technical support level and also, the broader dollar declined,” said Nicholas Frappell, global head of institutional markets at ABC Refinery.
A softer dollar helped support bullion prices, with the greenback weakening after the release of minutes from the US Federal Reserve’s June meeting. The minutes revealed that a majority of policymakers continued to back the idea of cutting interest rates this year. However, there was a split among officials over the timing of the cuts, as many expressed concerns about the inflationary impact of Trump’s trade tariffs.
